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Understanding Odebrecht: Lessons For Combating Corruption In The Americas

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Recently, the House Foreign Affairs Committee held a hearing titled “Understanding Odebrecht: Lessons for Combating Corruption in the Americas” in reference to the 2016 Foreign Corrupt Practices Act and related enforcement action against Brazil-based Odebrecht and its affiliate Braskem (see here and here for prior posts).

Granted, Congress often holds hearings with aspirational titles, but after watching the hearing I am not sure I came any closer to “understanding” Odebrecht or came away with any “lessons for combating corruption in the Americas.”

Nevertheless, set forth below are a few observations from the hearing.

First, members of Congress are capable of asking some very odd questions and in a few instances I felt sorry for the witnesses who clearly lacked much of a foundational basis to even answer the questions.

Second, it is always interesting to see the apparent lack of understanding of certain member of Congress. For instance at the approximate 46 minute mark of the hearing, Representative Adriano Espaillat (D-NY) seems to think that federal courts investigate cases rather than adjudicate disputes between litigating parties.

Regarding the substantive topics discussed during the hearing, call me pessimistic but I don’t believe that throwing U.S. taxpayer money at a problem – through the U.S. government funding civil society groups, investigative journalists, or having more U.S. government diplomatic personnel on the ground – is really going to accomplish much.

After all, Obebrecht – in the words of the DOJ – established a Division of Structured Operations, a standalone division within Odebrecht that “effectively functioned as a bribe department within Odebrecht and its related entities.” The DOJ further alleged:

“To conceal its activities, the Division of Structured Operations utilized an entirely separate and off-book communications system called ‘Drousys,’ which allowed members of the Division of Structured Operations to communicate with one another and with outside financial operators and other co-conspirators about the bribes through the use of secure e-mails and instant messages, utilizing codenames and passwords.”

On this issue of whether the U.S. can do anything to combat corruption in the Americas, kudos to Representative Ted Yoho (R-Fl) who rhetorically asked during the hearing (at the approximate 53 minute mark) whether any of the panelists could “point out any examples where U.S. support has led to progress in addressing anti-corruption in the region.”

In terms of the big picture, I do agree that the Odebrecht/Braskem enforcement action (not just the U.S. government portion) likely caught the attention of many in the Americas and is thus capable of advancing deterrence. (See here for a prior FCPA Flash podcast episode on this topic).

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